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India’s prime minister Narendra Modi has called for the mandate of multilateral lenders such as the World Bank to be expanded, as the IMF’s managing director demanded an increase in the lender’s resources by the end of the year.
Efforts to boost the balance sheets and reform the governance of the Washington-based multilateral lenders have been a central issue at the Group of 20 summit in New Delhi this weekend, partly as a means for western states to curry favour with developing nations amid geopolitical divisions over Russia’s war against Ukraine.
“We need to expand the mandate of multilateral development banks,” Modi said during the third leaders’ session of the New Delhi leaders’ summit, which began on Saturday. “Our decisions in this direction should be immediate and effective.”
Despite geopolitical tensions and discord over Ukraine, Indian officials say they have advanced an ambitious financial agenda during New Delhi’s rotating presidency of the group of large economies, including reform of multilateral banks, regulation of cryptocurrencies and the framework for restructuring heavily indebted countries’ debt.
India, which styles itself as a leader of the so-called “Global South” group of developing economies, on Saturday successfully pushed the G20 to admit the African Union as a full member of the grouping.
Modi’s call for an expanded mandate for multilateral banks echoes demands made by the US and EU for reforms of the World Bank, which are seen as crucial in helping poorer nations meet the financial demands required to pivot away from fossil fuels and adopt green technologies.
Washington is also concerned that a rise in bilateral lending by China will lead to stronger diplomatic ties between the Global South and Beijing.
Ahead of the summit US president Joe Biden pitched for a $25bn increase in the World Bank’s lending capacity for middle-income and low-income countries, with the potential for that to grow to more than $100bn if other countries make additional pledges.
Separately the EU has prioritised wide-ranging reform of the lender to give developing countries more sway over their decisions and operations. The US is likely to resist this, should it grant China a greater voting share.
On Saturday, the leaders of the world’s 20 biggest economies agreed a joint statement that “call[s] on the [multilateral development banks] to undertake comprehensive efforts to evolve their vision, incentive structures, operational approaches and financial capacities so that they are better equipped to maximise their impact.
“We will collectively mobilise more headroom and concessional finance to boost the World Bank’s capacity to support low and middle-income countries that need help in addressing global challenges,” the statement added. It provided no details on the possible scale of the increases or timeframe.
Separately, IMF head Kristalina Georgieva said the fund‘s lending quota needed to be increased. Leaders agreed that a review into its quota would be included by December 15 this year.
“To make the global economy stronger and more resilient in a more shock-prone world, it is vital to reach an agreement to increase the IMF’s quota resources before the end of the year and secure the needed resources for the fund’s interest-free support to the poorest countries,” Georgieva said in a statement at the summit.